What You Need to Know About Eviction and Bankruptcy

Rent is often your largest monthly expense, and if you’re experiencing financial stress, it can be the most burdensome bill to pay. A few months of missed rent payments could lead to an unwelcome eviction notice on your front door. So, if you’re already considering bankruptcy, you may wonder how it could affect your eviction status.

It’s important to remember that you still have rights. However, you don’t have to go through the process alone. Talk to an experienced landlord-tenant lawyer about your rights and legal protections.

The Eviction Process

Evictions don’t happen overnight. Most state laws require landlords to give tenants written notice of potential issues. However, the timing may vary from state to state. If you fail to remedy an issue—like months of unpaid rent—the property owner must file an eviction action in court. The property owner needs a judgment of possession before enforcing the eviction. This takes time, so you should be on notice if you are facing eviction proceedings.

The Bankruptcy Process

Filing for bankruptcy can also take time. Under Chapter 7 bankruptcy proceedings, it could be months before you can discharge your debts. And Chapter 13 bankruptcy cases can require years-long repayment plans to discharge your debt entirely. Therefore, timing can be critical when it comes to bankruptcies and evictions.

What Is an Automatic Stay?

When you file for bankruptcy, the court may grant you what is known as an automatic stay. This order blocks certain creditors from taking legal action against you until the court completes your bankruptcy. An automatic bankruptcy stay can apply to landlords, putting a hold on collection activities and pending evictions. But there are two major exceptions to this rule:

• If your landlord is evicting you for endangering the property or criminal activity on the property.
• If your landlord obtained a judgment to retake possession of the rental property before you filed for bankruptcy.

If your landlord has already completed eviction proceedings and won a judgment of possession, a last-minute bankruptcy filing will not stop your eviction. However, if the judgment was for failing to pay your rent, some states allow you to reinstate the stay and cure the delinquency by paying back due rent.

Very few states allow you to clear an eviction in bankruptcy after your landlord obtained a judgment of possession. Even when possible, it is often complicated. Federal courts handle all bankruptcy proceedings. You’ll need to file a certification with the bankruptcy court that advises whether your state allows you to cure the default. You may also need to send a copy to your landlord.

You’ll need to pay all back rent within 30 days of filing for bankruptcy. You may need to deposit any rent due in that time with the bankruptcy court clerk. After that, you’ll certify to the court that you’ve met your past due rent and future rent obligations. Then, the court can dismiss the eviction proceedings.

If the eviction is incomplete, the automatic stay that comes with a bankruptcy filing may temporarily delay your proceedings. However, it is unlikely to stop the proceedings altogether.

Evictions Based on Bankruptcy

Sadly, filing a bankruptcy petition could be the basis for an eviction, even if you are current on your rent payments. Some lease agreements include filing for bankruptcy as a cause for eviction. Others allow landlords to evict you or terminate your rental for any reason or no reason, including filing for bankruptcy. Bankruptcy can delay eviction, but the landlord can also petition to evict you.

Generally, you don’t need to tell your landlord you have filed or may be filing for bankruptcy. Read your rental agreement carefully to see if it contains anything about bankruptcy filings. Many property owners and managers require a specific credit score for renters. Remember that your landlord might become a creditor in your bankruptcy proceedings. In that case, they may still receive notice of the filing directly from the bankruptcy court.

A bankruptcy filing could remain on your credit report for up to 10 years. This harms your ability to rent or buy property in the future.

How Can an Attorney Help With an Eviction Judgment?

Hiring a bankruptcy lawyer or bankruptcy law firm to represent you in your bankruptcy case can help guide you through the challenges. Their legal advice can distinguish between a positive debt relief experience and a negative one. 

Get professional help by hiring a landlord-tenant lawyer you can trust. Many will offer free consultations, and all attorneys are sworn to protect your confidential information.